When you are running a business, it is easy to send out invoices with a simple “payment to be made within 30 days” term at the bottom. But what happens when the recipient takes more than 30 days to pay, and you are left having to take time to chase them?
Slow payers and overdue invoices can interfere with cash flow which is vital for a thriving business.
There is a statutory framework for businesses to claim compensation for each invoice that is paid late, as provided for in Section 5A of the Late Payment of Commercial Debts (Interest) Act 1998. The amount of compensation recoverable per invoice is dependent on the amount of the invoice as follows:
Invoice Value
Compensation per invoice
Less than £1,000.00
£40.00
More than £1,000.00 but less than £10,000.00
£70.00
More than £10,000.00
£100.00
As above, this can be claimed in every instance where an invoice is paid late. This is clearly of assistance to businesses however it is always recommended that you have a comprehensive set of late payment terms on the face of your invoices or within your Terms and Conditions to deter any slow payers.
If your Terms and Conditions are silent on a rate of interest, you may be able to charge the statutory rate of interest being 8% above the Bank of England base rate for business to business transactions.
Should you wish to discuss any queries regarding your business’ Terms and Conditions or recovery needs please contact Petra Wells on 02890434015 or email [email protected]
028 9043 4015 